A ‘closed plant production system’ or simply a ‘closed system’ is defined in this paper as a warehouse-like structure covered with thermally insulated opaque walls, in which ventilation is kept at a minimum, and artificial light is used as the sole light source for plant growth. CO₂ is enriched at a level of 1,000 μmol mol^-1 and evapotranspired water is collected at a cooling panel of air conditioner to recycle it for irrigation. No waste water containing chemical fertilizer is released to the outside. Advantages of a closed system over a greenhouse for production of plants shorter than 30-40 cm in height include: 1) rapid and uniform growth of high quality plants, 2) over 10-fold productivity per floor area per year, rapid growth, high planting density and high yield rate, 3) high utilization efficiencies of water and CO₂, 4) high light utilization efficiency of plants due to optimized temperature, light intensity and period, CO₂ concentration and water content of the substrate, and 5) virtually no heating cost is required in winter even in northern countries. Initial and operation costs per plant production capacity in closed systems are comparable to or lower than those in greenhouses. In 2007, the closed systems are used at 45 different locations in Japan for commercial production of transplants, herbal/medicinal plants and leafy vegetables, and at 15 different locations for research purposes.